Template:EFET Allowance Annex 8.2
- (a) Two Business Days Grace Period. When the Buyer fails to accept Transfer of a Contract Quantity in whole or in part on a Delivery Date as required in accordance with the terms of an Allowance Transaction, and such failure is not excused by an event of Force Majeure, Suspension Event or the Seller’s non-performance, the Seller shall afford the Buyer an opportunity to remedy its failure by again attempting to Schedule and Transfer such Contract Quantity (or undelivered portion thereof) to the Buyer on the second Delivery Business Day following the Delivery Date, provided that such day is not on or after the Reconciliation Deadline applicable to the undelivered Allowance(s), and further subject to the additional obligation of the Buyer to pay the Seller, as compensation for its failure to accept Transfer of the Allowances, interest calculated: (i) as follows for the two Delivery Business Day grace period; and (ii) as set forth in the applicable subpart of this § 8.2 for any longer period the Buyer fails to accept the Allowances thereafter.
- Interest for the two Delivery Business Day grace period shall accrue at the Interest Rate specified in § 13.5 (Default Interest) for the period from (and including) the Delivery Date to (but excluding) the second Delivery Business Day following the Delivery Date on the Total Contract Price of the Allowances not accepted by the Buyer, such Total Contract Price calculated as follows: the number of Allowances not accepted by the Buyer multiplied by a fraction determined by dividing the Total Contract Price by the Contract Quantity.
- (b) Seller’s Cover Costs. In the event that the Buyer fails to accept Transfer of all or any portion of a Contract Quantity as required by § 8.2(a) (Two Business Days Grace Period) in accordance with the terms of an Allowance Transaction and the Seller has not agreed to a Deferred Acceptance Date as provided for in § 8.2(c) (Seller’s Right to Waive Its Cover Costs), the Buyer shall incur the obligation to pay the Seller, as compensation for its failure to accept Transfer of the Allowances, an amount (hereinafter “Seller’s Cover Costs”) equal to the sum of:
- (i) the price, if any, less than the portion of the Total Contract Price applicable to the Allowances not accepted by the Buyer, which the Seller, acting in a commercially reasonable manner either did, or would have been able to, receive, in an arm’s length transaction with a third party or parties, from the resale of the Allowances not accepted by the Buyer;
- (ii) such reasonable additional incidental costs as the Seller incurred in attempting to make or making such resale of the Allowances; and
- (iii) interest accrued during the two Delivery Business Day grace period as provided in § 8.2(a); plus interest, at the Interest Rate specified in § 13.5 (Default Interest), accrued from (and including) the first Delivery Business Date following the Delivery Date, to (but excluding) the date of receipt by the Seller of damages for the Buyer’s failure to accept, such amount calculated using the following formula:
- Amount on which interest accrues = ANA x CP
- Where:
- ANA means Allowances not accepted, the total number of Allowances the Buyer failed to accept; and
- CP means the aggregate Contract Price that the Buyer would have been required to pay to the Seller for all Allowances not accepted by it.
- (c) Seller’s Right to Waive Its Cover Costs. The Seller shall be entitled to invoice the Buyer for damages payable pursuant to § 8.2(b) (Seller’s Cover Costs) in accordance with the requirements of Payment Cycle B as defined in § 13.2 (Payment). However, the Seller may alternatively, but shall be under no obligation to, defer the due date on the payment of such damages for a reasonable period of time (but in no event beyond the applicable Reconciliation Deadline) if the Buyer has indicated to the Seller its intent to attempt to cure its acceptance default within a period of time acceptable to the Seller.
- (i) At any time prior to the due date applicable to the payment of damages due to the Seller under §8.2(b), the Buyer may offer to accept Transfer from the Seller on a new Delivery Date (the “Deferred Acceptance Date”) of the Allowances it failed to accept Transfer of on the original Delivery Date. The Seller may, but is not required to, agree to attempt to again Transfer such replacement Allowances to the Buyer on the Deferred Acceptance Date. If it so agrees, the Seller, in lieu of the damages it is entitled to recover under § 8.2(b), shall be entitled to both Transfer and receive payment of the Contract Price for the Allowances on the Deferred Acceptance Date and to further invoice the Buyer for interest for the intervening period calculated as the sum of the interest accrued during the two Delivery Business Day grace period as provided in § 8.2(a) plus interest at the Interest Rate specified in § 13.5 (Default Interest), from (and including) the second Delivery Business Day following the Delivery Date to (but excluding) the date of actual acceptance of Transfer of the Allowance(s) previously not accepted, accrued on the amount calculated in accordance with the formula set forth in § 8.2(b)(iii).
- (ii) If the Seller agrees to the Buyer’s offer to accept Transfer of the Allowances on a Deferred Acceptance Date as provided above in subparagraph (i), but the Buyer again defaults on its acceptance of Transfer obligation, the Seller shall be entitled to invoice the Buyer for an amount calculated in accordance with § 8.2(b) (Seller’s Cover Costs) save that the amount it may so invoice the Buyer shall account for both:
- (A) interest, calculated as provided in § 8.2(b)(iii); and
- (B) any depreciation in the Seller’s Cover Costs reflecting lower prevailing market prices available for the resale of Allowances on the Deferred Acceptance Date when compared to those available in the market on the original Delivery Date.